Equities rebounded on Monday, with the Nasdaq increasing 1.88 percent. The S&P 500 Index rose 1.32 percent and the Dow Jones Industrial Average climbed 0.68 percent. The Russell 2000 Index slipped 0.18 percent.
Technology stocks led the market rebound as SPDR Technology (XLK) experienced an increase of 2.49 percent. SPDR Consumer Discretionary (XLY), which has 40 percent of assets split between Tesla and Amazon, climbed 1.56 percent. SPDR Energy (XLE) and SPDR Financial (XLF) saw smaller increases of 0.56 percent and 0.28 percent.
Crude oil approached $70 per barrel on Monday, after falling below $68 on Friday. It was $78 per barrel last Wednesday. The consumer price index historically tracks with oil. Should oil stay low, the Fed will back off talk of an accelerated taper and earlier rate hikes.
The November flash manufacturing and service PMIs will be out early this week. Analysts predict both numbers will increase slightly from October. Final numbers come out on Friday.
The big data point this week is the November employment report, which will be released on Friday. Economists predict 581,000 net new jobs, up from 531,0000 in October. Recent months have seen big job revisions of prior months, so that may still be a factor. Economists also forecast a dip in the unemployment rate to 4.5 percent and wage growth of 0.4 percent, matching October’s growth.
Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen will testify before Congress on Tuesday and Wednesday. The topic will be the CARES Act, which was passed in March 2020. While this is mostly a backward-looking assessment of the spending and its effectiveness, we expect Congressmen and Senators will raise the issue of inflation. This could impact the market as it may dictate support for more stimulus bills over the coming year. The House also passed a large spending bill in November, separate from the infrastructure bill, but has stalled in the Senate due in part to inflation concerns.